Extension as well as Contraction of Demand
Assuming other factors (or determinants) rest constant (don't change), the alter seen inward the blogspot.com//search?q=demand-price-law-of-demand-determinants">demand due to a alter inward the cost is called Extension as well as Contraction of Demand.
The concept of extension as well as contraction of withdraw inward economic science tin halt last studied as well as best understood amongst the help of the next graph.
blogspot.com//search?q=demand-price-law-of-demand-determinants">factors affecting demand rest constant.
The X-axis or OX represents Demand. The Y-axis or OY represents Price. Points M1, one 1000 as well as M2 on OX represents an increment inward the demand. Points P1, P as well as P2 on OY represents an increment inward the price. The trouble DD' represents the Demand Curve. AB is the Contraction of Demand. BC is the Extension of Demand. Consider or mention the inward a higher house graph for the next explanation:
- Extension of Demand:
- If the cost decreases from OP to OP1, as well as thence the withdraw increases (rises) from OM to OM2. This growth of the withdraw is called Extension of Demand as well as is represented yesteryear BC.
- For example, say, the prices of Indian Alphonso Mangoes falls inward the local markets due to a higher yield as well as ban on their exports to other countries. As a result, their local withdraw automatically increases. It is so, since, amongst lower prices forthwith fifty-fifty ordinary people amongst piddling income tin halt forthwith afford to savour them.
- Contraction of Demand:
- If the cost increases from OP to OP2, as well as thence the withdraw decreases (falls) from OM to OM1. This autumn of the withdraw is called Contraction of Demand as well as is represented yesteryear AB.
- For example, if the prices of apples rising their withdraw inward the blogspot.com//search?q=demand-price-law-of-demand-determinants">market falls. It is so, since, amongst the skyrocketing prices of apples the ordinary people can't afford to purchase them amongst their express income. As a result, the withdraw for apples automatically falls.
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Conclusion
The concept of extension as well as contraction of withdraw inward economic science help us to conclude that the cost as well as withdraw are inversely proportional to each other. In other words, if the cost of a commodity increases as well as thence its withdraw decreases as well as vice versa.
